WASHINGTON-The Federal Communications Commission has proposed a rulemaking that would allow almost limitless foreign ownership of U.S.-based telecommunications carriers.

The commission, however, vowed to retain certain safeguards that would restrict some foreign investors and/or carriers that exercise near-monopoly power from entering the domestic market. In a related docket, the FCC is considering several proposals aimed at redesigning the current license payback plan to which C- and F-block personal communications services auction winners must adhere.

In a notice released June 4, the commission seeks to bring its own foreign-ownership policies in line with those that will take effect Jan. 1 as a result of the World Trade Organization agreement signed Feb. 15. Most FCC licenses are restricted to a 25-percent foreign ownership ceiling. NextWave Telecom Inc. and Pocket Communications Inc. have asked the commission for an increase in foreign ownership during the past few months as a method of raising additional capital.

Although no due date has been released, public comment is sought on the following items:

Should the commission abandon its practice of subjecting foreign investors to the “effective competition opportunities” test in light of the WTO’s 65 co-signers that already have vowed to open competition in their countries?

Should indirect ownership of common carrier licenses be allowed if the foreign investor is a member of a WTO country?

Is an equivalency analysis still necessary as a basis for authorizing carriers to provide resale or facilities-based services between the United States and WTO member countries?

Should the FCC retain the right to condition or deny applications from WTO members if deemed “in the public interest.”

Should the commission allow flexible arrangements between the United States and other WTO signatories unless “market conditions in the country in question are not sufficiently competitive to prevent a carrier with market power in that country from discriminating against U.S. carriers?”

The commission also proposed modifying its current dominant-carrier safeguards, including adopting supplemental rules that would apply to nondominant foreign carriers. Such new rules could encompass “prohibiting exclusive arrangements with the affiliated foreign carrier for the joint marketing of basic telecommunications services, the steering of customers by the foreign carrier to the U.S. carrier or the use of foreign market telephone customer information.” Carriers also may be required to file quarterly circuit status reports.

In addition, the FCC may require structural separations between U.S. carriers and their dominant foreign affiliates. The question is, what kinds of separations are needed?

“In light of the historic move by countries representing the overwhelming majority of the world telecommunications market to open their markets to foreign entry and investment and to bind themselves to the pro-competitive rules … we believe that we should similarly open our market to foreign investment and entry by foreign carriers,” commented FCC Chairman Reed Hundt. “Such entry will attract increased investment capital and will introduce new sources of competition in the telecom market in the United States, which will produce lower prices and greater service choice and innovation for American consumers.”

Following on this statement, the commission has asked for comments on a request from several PCS entities to revamp the timeframe in which they must begin paying the government for their entrepreneur’s block licenses. Deadlines for beginning installment payments on these licenses had been moved to 1997 as a result of a March 31 FCC order, and several entities-including MCI, General Wireless Inc. and the National Association of PCS Entrepreneurs-would like to see installment payments halted until five years after a license has been granted. The commission also is inviting companies to submit other forward-looking payment schedules.

The FCC would benefit by avoiding the possibility that it would force defaults by demanding all cash available to C- and F-block licensees and then be forced to reauction defaulted licenses, which are likely to bring in less money and ultimately “be responsible for collapse of the competitive market envisioned when the C and F blocks were created,” submitted Michael Roberts, NAPE chairman. According to Roberts, more than 90 percent of his constituency is in favor of payment changes.

Disagreeing with recent FCC rulings regarding payments was Cook Inlet Region Inc., owned by Native Americans in Alaska, which has made its payments on time and has asked the FCC to craft a set of rules that would govern treatment of licensees that cannot meet their financial obligations. “Although the commission intended that its installment payment rules would be strictly enforced as a condition of licenses awarded by competitive bidding, certain entities placed irresponsible bids in recent auctions and now seek to transfer the burden of their choices to the commission,” the group wrote. “CIRI believes that a developed record on this issue will reveal the negative impact of addressing these situations on a case-by-case basis in the absence of applicable regulations … Individualized waivers and grace periods are fundamentally unfair to those designated entities who have honored their obligations to the government.” CIRI wants the commission to restore all payment obligations until its recent decisions have been subjected to public notice and comment.

The FCC also has received requests from C- and F-block players that made timely payments for a refund until such a time as those payments really are due. Fortunet Communications L.P., Southeast Wireless Communications L.P., Comtel PCS Mainstreet L.P. and Americall International L.L.C. all submitted letters to the commission asking that the payments they made before March 31 be returned.

Comments on restructured payment plans and refunds are due June 23; reply comments are due July 8.


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